By Raúl Rodríguez Cota
25 Sep 2023, 18:12 PM EDT
Monday’s Powerball drawing has an estimated jackpot of $785 million, which is the fourth largest in lottery history. However, after paying the required taxes, the ticket winner will walk away with considerably less.
The winner can choose to receive the $785 million in 30 annual payments over the next 29 years or can instead choose to receive a single payment of $367 million.
If you choose to receive a single lump sum payment, after paying a 24% federal tax, the $367 million dollars would be reduced to $278.9 million.
If the winner has a high income and is subject to a 37% federal tax rate, his winnings would be further reduced to $231.2 million.
In certain states, lottery prizes are also subject to tax, with rates ranging from a low of 2.5% in Arizona (which would be $9.1 million of the jackpot) to a high of 10.9% in New York (equivalent to $40 million dollars).
However, it is important to mention that some states such as California and Texas do not tax lottery jackpots.
If the winner chooses to receive the payment in annuities, they must pay the same taxes, but in smaller payments made annually.
This jackpot ranks as the fourth largest in lottery history and is the second largest prize awarded this year, trailing only a $1.08 billion prize won in July.
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